Starbucks Sells Majority Stake in Chinese Unit

Starbucks Coffee Co. (Seattle) has unveiled plans to sell a majority stake in its Chinese business to Shanghai-based Boyu Capital for $4 billion. Putting a local partner in charge of the enterprise will help grow Starbucks’ presence in China, its second-largest market after the U.S, the companies say.

The agreement calls for Boyu to hold a up to 60% interest in Starbucks retail operations in China, with Starbucks retaining a 40% interest in the joint venture and continuing to own/license the Starbucks brand and intellectual property to the new entity.

The business will own and operate the 8000 Starbucks coffeehouses across the market, with a goal of growing that to as many as 20,000 locations over time.

“Boyu’s deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions,” said Brian Niccol, Chairman and CEO of Starbucks Coffee Co.

Said Boyu Capital Partner Alex Wong, “Starbucks has built an iconic brand and a deep connection with Chinese consumers over the past 26 years. This partnership reflects our shared belief in the enduring strength of that brand and the opportunity to bring even greater innovation and local relevance to customers across China.”

In its coverage of the news, Nikkei Asia noted that the Boyu deal concludes “a lengthy search for a local partner in an increasingly tough market.” The companies say the joint venture should be in place by the second quarter of next year.